The "QE 2 As A European Bank Bailout Vehicle" Story Picks Up Traction

The blockbuster story first posted on Zero Hedge claiming that QE 2, and more specifically the $600 billion (to date, and $750 billion through maturity) in reserves generated as a result, was nothing more than another European bank bailout smokescreen is starting to pick up steam with the contrarian intelligentsia. Here is Sean Corrigan's take on a topic which we have a very distinct feeling will be the cause of substantial Q&A between the Chairman and the Monetary Policy Subcommittee shortly. From Corrigan: "Note that while Large domestically-chartered banks have cash assets of some $509 billion v non-cash ones of $6.840 billion (a ratio of around 8%), and small domestics hold $293 billion in cash against $3,595 billion in no-cash (a similar ratio of approx 9%), foreign banks have the startling sum of $940 billion piled up against non-cash assets of $998 billion for a ratio of an incredible 94%. Put another way, despite the fact that all domestics’ combined non-cash assets amount to getting on for ten times those of foreign banks ($9,633 billion v $998 billion), they actually hold 15% LESS cash ($803 billion v $940). Once again, European banks have a lot for which to thank Mr. Bernanke, even if his fellow citizens have far fewer reasons to be grateful!"

Full note from Sean:

There has been a great deal of misplaced commentary about how the presence of some $1.6 trillion in commercial banking deposits with the Fed has somehow meant that its QE programmes were NOT increasing they money supply (they have been, by 30% since the panic first broke out) but were merely effecting some kind of wholly neutral ‘asset swap’ (yes, but the point is the Fed has been swapping bonds for MONEY!).

We have often tried to point out that while this excess reserve accumulation may mean that the classic, fractional reserve multiplication of the Fed’s injections has not been taking place to its theoretical maximum, the Fed’s programmes were, nonetheless exerting sufficient inflationary impetus all by themselves - albeit with the severe impediment that they were funding government-sponsored profligacy and zombiehood, rather than aiding the recuperation of a vibrant private commercial and industrial sector.

A breakdown of the cash ‘hoarding’ by bank origin further reinforces the point, for here we find that much of the extraordinary rise in precautionary cash holding has been undertaken by foreign, not domestic, banks.

After the salutary lesson given banks across the word when they suddenly found they could no longer roll over their short-date eurodollar funding at the height of the LEG-AIG crisis, this is hardly inexplicable. We suspect, too, that if you were to squint at the two side by side you would see the pattern of reserve holdings for this group would make for a passable a facsimile of the chart of the path of European sovereign CDS prices!

Meanwhile, US banks are notable in having added nothing more to their own backstop over the last two years or so, meaning THEY are not really holding up American creditisation to the extent some would have us believe.

To make the contrast even more clear, note that while Large domestically-chartered banks have cash assets of some $509 billion v non-cash ones of $6.840 billion (a ratio of around 8%), and small domestics hold $293 billion in cash against $3,595 billion in no-cash (a similar ratio of approx 9%), foreign banks have the startling sum of $940 billion piled up against non-cash assets of $998 billion for a ratio of an incredible 94%.

Put another way, despite the fact that all domestics’ combined non-cash assets amount to getting on for ten times those of foreign banks ($9,633 billion v $998 billion), they actually hold 15% LESS cash ($803 billion v $940).

Once again, European banks have a lot for which to thank Mr. Bernanke, even if his fellow citizens have far fewer reasons to be grateful!

NB, A year before the crisis (Sept 07), large domestic banks’ cash:non-cash ratios stood at 3.7% and small domestics’ at 3.1%, for a combined 3.5% which they have since just more than doubled. Foreign bank equivalents, however, rocketed from 7.7% to 94%.

What is also telling is that non-cash asset growth at large domestics in the intervening period has amounted to 38%, small ones’ to 18% - incidentally, not only proof that there has been no overall credit ‘deflation’ generated here, but a clear sign that TBTF corporatism and asset speculation has been the main outlet for Fed largesse – while the corresponding entries on foreign banks balance sheets have only grown a derisory 4.3%

bernanke is an agent of Rothschild, Oppenheimer, and other world banking elite.

The USA is not a sovereign state. It is a colony that belongs to the Rothschild family and Israeli banking elite. In America they own everything of any value: the White House, the Congress, the Wall Street, the Supreme Court, the major banks, the mainstream media, etc., Consequently, they are spending their subjects (a.k.a. US hard-working taxpayers) money in any place they pleased.

ORI, not many know about that scam.
Few know that the fuhrer faked his death and instead travelled safely to the Vatican. While he did not suceed completely at the mission enthrusted to him by his master (Pope Pius XII), he had earned his safe passage.
Many lies are about to be exposed soon: the sham/scam about "europeans discovering America" is one of them. An avalanche of undeniable evidence is about to emerge which vindicates Gavin Menzies book:

Ahmeex touches a moot point in my own thinking about what differentiates Oriental and Occidental philosophy and therefore history; as the first impinges on the other as it fuels man's actions. In essence, Eastern civilization, full of the tree of true knowledge, never follows through, never builds sustainable social models that live through the ages whatever their limitations, like happened recurrently in the West; until the entropy factor destroys them. Somehow, in the East, the mindset of geo-political play, it's never a chess game of clarity and clear check mate, its a game of Go and space occupation. So, to revert to the article of Chinese discovery of Americas and world navigation prior to Vasco de Gama and Columbus, they never followed through! Whereas the West did! Its culture is hands-on, pragmatic, like Alexander and the gordian knot! Not steeped in superstition, and ethno-cultural constraints, nor in "middle kingdom" inward looking ideology; as both Caesar and Charlemagne amply showed. Big difference in mind set. The East never built institutional growth models which lasted like the West and the Lex Romana...or Plato and Aristotle. The Muslims abandoned logic and science for Dogmatic reasons in the pre-renaissance days, which the west never accepted even under their theocratic popes. Technology has since been time's arrow in the west and political science has flourished concomitant..like the enlightenment.

Why didn't we see a similar flourishing in the East, which had the most learned of minds and the greatest in-bred manifestations of civilization in the COMMON MAN, a constant reality in the every day living of oriental peoples. It's a mystery to me....Manifest destiny never accomplished.

"Heinz ketchup" Kissinger...at his best...gut balancing of power means we share everything...like at the Vienna conference in 1814; when they shared the remnants of Napoleon's power under Metternich style diplomacy, K's model.

In practical terms this 'mitteleuropa' play by K post WW2 meant "recycling" nazis to USA. As for 'die fuhrer'...lol...

There is a lot more around. This issue of sovereignty is going to come front and center soon and arcane treaties, still being adhered to, including Admiralty courts in the US, India's recent, pre and post independence past are cloaked in one mystery after another. Who owns India? Every war "victory" in the last century was meticulously arranged.

That article needs to make the rounds among the financial press. Now if only Bloomberg would actually concern itself with the inner-workings of QE 2 then maybe Tyler could actually take a vacation from this shit show. But nobody cares... market nihilism wins again. Until one day it doesn't. I'm looking forward to that.

This would be our job Gene. The mass media isn't going to tell the common man that they have been robbed by the very people who pay the media's bills. It's up to the ZH membership and everyone who frequents this site to push this info to the masses, be it on money.cnn.com via the comments section on the articles, or from putting it up in your facebook groups, etc. We still have a modicum of free speech and power, now is the time to start using it, before we lose even that!

I don't think that it's that they don't want to know. They just don't know what to do about it. And, calling for ropes and pitchforks isn't going to resonate with the average mom and dad trying to get their kids through school. One person can lead hundreds, but there needs to be a specific goal, not just pointing out the problem and hoping everyone will figure out the solution on their own. Tell people what they need to do and you will be surprised by the number ready to help. But just throwing fatalistic platitudes at them serves no purpose what-so-ever.

Yeah, just stop the average fat guy at the food court in your local mall and tell him:

NB, A year before the crisis (Sept 07), large domestic banks’ cash:non-cash ratios stood at 3.7% and small domestics’ at 3.1%, for a combined 3.5% which they have since just more than doubled. Foreign bank equivalents, however, rocketed from 7.7% to 94%.

Or, for that matter, contact the local newspaper's editorial staff and by email and send the whole article.

Support for media is a critical prong of U.S.democracy and governance assistance. USAIDStrategic Objective 2.3, “Increased developmentof a politically active civil society,” provides arationale for media-related programming.Intermediate Result 2.3.4, “Enhanced free flowof information,” broadly states the Agency's goalfor media activities.While media is considered by USAID to be a partof the civil society arena, it is well known thatmedia overlaps other functional areas ofdemocracy and governance. For example,support for media may yield results ingovernance activities, particularly those relatedto decentralization, anti-corruption, and citizenparticipation in the policy process. The rule oflaw may be further institutionalized by supportfor an independent media that keeps a check onthe judiciary, reports on the courts, and promotesa legal enabling environment suitable for pressfreedom. Free and fair elections conductedthrough transparent processes require a mediasector which gives candidates equal access, andreports the relevant issues in a timely, objectivemanner.

[These things are purposely complicated and couched in terms of art for a reason.]---RockyRacoon

Hi Rocky. You might find the following quote interesting.

"Hamilton’s financial system (First Bank of the United States 1791-1811, a private U.S.central bank issuing fiat currency) had then passed. It had two objects; 1st, as a puzzle, to exclude popular understanding and inquiry; 2nd, as a machine for the corruption of the legislature..."

Correlation does not equal causation. This story is simply conjecture at this point.

If you were a bank in the EU region, would you be lending money? To anyone? To any government? Of course it makes sense for them to be hoarding cash at this point. It does not mean that the Fed is directly funnelling the money to the foreign banks.

Your point is well taken, it's not to be taken as gospel even though it's Tyler. But you have to admit it's pretty late in the game? I see drastic, creative, basically only risky options left for everyone involved. But maybe we shouldn't get ahead of ourselves...

If you want to know the truth on how global capital has flowed since QE2, simply take a look at this report from UBS. Look at the schematic on page 6, and you will understand why the reserves at the foreign central banks have risen:

but then we wouldn't have to hand over our railways, public services etc.

which is the purpose: transfer assets (paying debt in taxes or inflation) from the public realm (built up by previous generations) to private institutions, and then sell em back at the public at a premium. (in a monopolic position of course)

me three. And, depressed, I think. I'm in negotiations right now as to my involvment in a new small business and not so long ago I would be totally jazzed at this point - jumping out of bed every morning with electricity in my veins - everything is right, viable, I can smell the money. . . BUT - for how long. . . weariness and wariness and a big but (butt) hanging over everything. *sigh*

Something doesn't seem right here. I read zero daily and appreciate the effort put into every article. But for the past year we slowly learned that QE2 meant POMO, and Zero taught us that POMO meant a almost daily shot of 6 billion dollars to the Primary Dealers, who turned around and used that money to buy securities, which is what managed to pump the equities bubble back up.

Now the story is being changed and we're being told well that money in fact didn't go to primary dealers or at the least it wasn't used to buy equities and isn't the catalyst for driving equity prices up and getting the indices to recover?

And if that's the case, then what was the cause of the bear market rally over the past year in Zero's opinion. There's a schism here that needs to be addressed and clarified.

Good questions and in the market it is all about perception: as long as everyone else is convinced that money was doing X, others were frontrunning it. After all, the Fed was telegraphing this every day.

Imagine the outflow if and when the market realizes X never actually happened...

The Fed "frontrunning" in itself would be perfectly sufficient. The Fed $ to PDs would be a marginal source of buying at best. It is everyone else who piled into the trade in advance and/or concurrently that truly drove it.

Once you join the party...you don't want it to end..."One last waltz please!" and then..."oh that was awesome...I feel like singing, being, like in 'I could have danced all night'...knowing next morning it'll be pay up time...I don't want this night to end..."

"The Band Wagon"... with Fred Astaire and Cyd Charisse...wow, who would want the party to end!

for a mass equities exodus now, there would have to be a complete oversight of corporate fundamentals, which are still solid. the only thing that could ignite the aforementioned would be a mass exodus from u.s. treasuries due to u.s. credit fears. we are not there yet. qe3 is not coming this year as we will continue to bounce along...

educate yourself rocky instead of succumbing to zh groupthink....inside selling numbers predict nothing. such as the end of 2009, when there was massive insider selling.....and the stock market took off to nearly double.

AHH HA HA HA yea corporate fundamentals which are still solid, nevermind they'd all have been bankrupt long ago without ZIRP free money avalanche and no-look accounting. Youre high Kito, or a troll...this pile of crap is crashing as we speak and it wont be a soft landing.

is it actually crashing? where? are stocks down 25 pct? are u.s. treasuries the pariah of the investment community? have corporate earnings plunged? do explain how you define "crashing" at this very moment, as stocks are back up today and gold down once again. my point has remained the same, we are not headed for armageddon anytime soon. much has to play out first. u.s. economy is currently stagnant, not in a free fall.

Ya know, I actually hope you are right, at least for the short term (next couple of years). I've got some chattels, collectibles, and merchandise that needs to be liquidated. I could use the extra time -- before the total melt down. Yard sales, eBay, and other sales venues are being utilized to expedite the fire sale. I'm pedaling as fast as I can.

For a while there this dumb Paddy thought that ELA was free money but this is what happens when the your central bank governor reports / takes orders from a higher church while your state is obliged to take on all liabilties !

Or better yet, in a classic twofer, the PDs were instructed to buy everything the foreign sovereigns were selling, prior to flipping the stocks for whatever they want. Bail out the foreign banks and prop up the stock market at the same time.

Absolutely Tyler. Too many left-brained black and white types trying to figure out the most complex financial smoke & mirrors scheme ever poured from the black cauldron of Kleptonomics. The world-wide central planning orchestra has many more movements to it than can possibly be conceived by our wildest imaginings. We should never think in terms of this or that....and the only thing more confusing to me than what the next trick will be, is the propensity of many on this site who continue to speak in the language of fundamentals and/or technicals when discussing markets. Nothing is at it seems!

This isn't surprising though. At the university I went to, they teach that monetary policy doesn't work unless the market expects something different from what the central banks actually do. The entire purpose of monetary policy is to "e pluribus fool 'em" as banzai7 would say.

You'll have to show a before and after of treasury holdings of the foreign banks for this to switch from a "correlation" story to a "causation" story. Until you can show that the money printed by the Fed bought treauries from the foreigns, you really got nothing.

What was Greece exposed to that drove them into this mess after Lehman? Do I hear?? USA mortgage-backed securities.

The weakest link in the global ponzi scheme gets the scapegoat treatment.

Taking into account how much Anglo-Saxon economic media and the rating agencies have been investing in starting the Greek & euro crisis in 2009-2010, I'd say this is just a way of selling your website, through yet another story "from a different angle".

This story is being used by ZH in their war against the Fed. I think it's got nothing with Europe actually... they're not the target of this story. It's basically another way to further discredit the Fed.

I've got nothing against that, but I think it runs against some of ZH's former positions on why the Fed did QE2. When you spin your story twice in opposite directions, you ultimately discredit yourself, because who's going to believe that "this time we got it right, folks"? I wonder what's the next story on which ZH will change its position to its opposite.

"One strategy, which bank executives only agreed to discuss without attribution due to the political sensitivities related to discussing Treasury debt, is to have more cash on hand to put up as collateral against derivatives and other transactions, decreasing the financial system’s reliance on Treasuries."
So are the "Foreign Banks" sitting on "cash" or Treasuries?

Risk premia repricing mechanisms do not require linear money flow. Excess liquidity is fungible and leveragible. The ability to hold impaired assets can produce the appearance of solvency while creating a side affect of mispricing risk somewhere else. All risk premia are mispriced at the margin. Looking for nominal money flow will not work.

Are you saying all those cusips of recently issued treasuries which you regularly posted as being flipped back to the Sack team were also smoke and mirror? The Fed never bought any of those freshly minted treasuries but instead bought $600b of treasuries held by the foreign banks?

Apart from stocks levitation, are we saying commodities prices going up and inflation in Asia are all smoke and mirror, that none of the QE2 money ever found its way out of European banks?

So the bull market in equities was not driven by POMO, but rather the "illusion" of POMO?

That seems like a big difference! This is beginning to make me question all the POMO posts. I thought it was very clear that POMO was jamming the stocks, but now we're being told the bull run was being juiced by people who erroneously believed the POMO story and tried to front-run it.

Look at who the Primary Dealers are, their participation at the auctions, which Treasuries they purchased, which issues were almost automatically sold back to the FED via POMO. If you have the time, which I do not at the moment, grab some CUSIPs and Google their activity per the POMO, which ZH has been religiously reporting on since Day 1 of QE2. You'll find a lot were purchased by European PD's then sold back to the Fed. Tyler has done a bang up job watching this and it does demonstrate that the Fed fraud of QE2 which is ending now will have had the desired impact:

This new agenda is nothing more than a harvest from the seeds planted ninety-eight years ago, yet few realize the implications. The United States will have legitimized a de facto fourth branch of government to insure domestic tranquility and economic stability, leaving little if any responsibility to the elected officials. As designed on Jekyll Island in 1913.

Good read....thanks John.

Will there? Won't there? Anything to keep the masses "in line" and unaware that they are on the loosing end of the worst rape EVER.

There will be no QE3, not in the form people believe anyway of more free money to make 401K's look good. The FED will next seize all 401K's and pensions in the next 'unforeseen financial crisis' planned of course. Poverty equals wealth, in the brave new world.

I would suggest that the answer lies in superior knowledge of the Elites. This is their game, played in their stadium, by their rules, with their equipment and they are the holders of all the strategies.

ZH attempts to discover what that strategy is, but it is as clueless as the rest of us. We are shooting at shadows. We see glimpses, but not the players as they run by. We are constantly finding explanations for past events and trying to make sense of them.

Pretty difficult, when you do not know the milestones along the path. We may know the goal: world domination and debt slavery, but we have to sleuth the means to that goal.

yeah, that is the deal the FED cuts with banks for cash. You get cash and then you buy our bonds forever. Not that it will work forever but I expect there is some sort of hook the fed can induce them with that is a bit stronger than "upon your honor, sir!". Lets see if those bonds still get bid or not in the short time frame before QEIII or whatever new set of liabilities the FED decides it wants.

Hand me $5 billion free dollars, and I'll also be happy to report 'record profits and margins', no problem. Dream on about this just slouching onward like this for years, world war is already starting up big time. You have maybe months to get your shit together, certainly not a year.

most corporations werent handed free money. our industrial corporations like deere and caterpillar and eaton have actually produced and sold machinery. retail corporations like starbucks actually purchase, roast, grind and sell coffee. you have a myopic, distorted view of corporate health.

china's growing middle class is doing quite well actually. starbucks planning to triple the number of stores in china over the next several years. chinese middle class eating quite a bit of pork and beef as well. good for our pharma industry. soon, thanks to our corporate dominance, the chinese consumer will be fat, happy and drugged.

In fact if you look closely at the the graph it make sanse... the outflow of reserves started around mai 2010, give it month or two to get cash around.... and then look at S&P the runup start approximatelly at this time..

Then the cash outflow from the euro banks reverse around the end of 2010.. and we get almost flat S&P in 2011..

The Europeans would never have acquisced to USD reserve currency in the first place (in the 70s) without the swap arrangement and the understanding to have access to USD at their request. This is part of the arrangement and is required to keep them participating in this USD centric global financial system. In my view, this is part of the arrangement without which this system would fail in a second -- no dramatic story here I am afraid.

especially since euro dollar creation in 70s and its bloating up to recycle "petrodollars" from ME into DC and EM (Brazil/Mexico) economies. BTW, this latter financial bonanza of the 70s nearly brought the economy down when the bank lending went belly up (crash of 1979 scenario) that Volcker avoided with his tough monetary medicine as he cut-off the monetary inflationary beast then. Kudos to him and the opposite to his successor AG who was such a sucker for zero percent lending and M2 inflation in name of "irrational exuberance".

He admitted to it but by then it was too late and GS owned finance USA.

Volcker hyper deflated the world economy that was his first objective, allowing Maggy and then RR to decouple wage inflation and corporate profits, as was NOT the case in the previous model. Inflation was the killer then, in 1975-1980 period. Volcker/Maggy achieved both aims : spike the inflation, decouple wages from inflation. In 1982, RR ORDERED Sauds to open the Oil tap. One phone call was all it took, it's price fell in 1983 for twenty years and we were away for the Reaganomics model to raise USA from its Carter doldrums. WS took off. The export of industry OUT of the USA began after RR left, in 1990 onwards, when Japan collapsed.

The "outsourcing" model followed onto to the Japanese model built after BW repeal that obliged Japan to find new local markets as USA went temporarily protectionist, after 1971 BW repeal. It's Japan that built up the S E asian outsource model with the "new tiger" economy. When USA copied it, essentially after NWO in 1991, Volcker was long gone since 1987. That's my understanding of that period...The hyperinflation as you say of the USD was not the aim, if it happened, I can't remember honestly, but the consequence of his major economic aims stated above.

This is open treason if true. Will Americans care? Not a chance in hell. Football seasons is coming up, beer is in the fridge and ridiculous social issues like gay marriage and healthcare will dominate their attention instead.

1. Hear no evil, see no evil, speak no evil. Regardless of what you know, don’t discuss it — especially if you are a public figure, news anchor, etc. If it’s not reported, it didn’t happen, and you never have to deal with the issues.

2. Become incredulous and indignant. Avoid discussing key issues and instead focus on side issues which can be used show the topic as being critical of some otherwise sacrosanct group or theme. This is also known as the “How dare you!” gambit.

3. Create rumor mongers. Avoid discussing issues by describing all charges, regardless of venue or evidence, as mere rumors and wild accusations. Other derogatory terms mutually exclusive of truth may work as well. This method works especially well with a silent press, because the only way the public can learn of the facts are through such “arguable rumors”. If you can associate the material with the Internet, use this fact to certify it a “wild rumor” which can have no basis in fact.

4. Use a straw man. Find or create a seeming element of your opponent’s argument which you can easily knock down to make yourself look good and the opponent to look bad. Either make up an issue you may safely imply exists based on your interpretation of the opponent/opponent arguments/situation, or select the weakest aspect of the weakest charges. Amplify their significance and destroy them in a way which appears to debunk all the charges, real and fabricated alike, while actually avoiding discussion of the real issues.

5. Sidetrack opponents with name calling and ridicule. This is also known as the primary attack the messenger ploy, though other methods qualify as variants of that approach. Associate opponents with unpopular titles such as “kooks”, “right-wing”, “liberal”, “left-wing”, “terrorists”, “conspiracy buffs”, “radicals”, “militia”, “racists”, “religious fanatics”, “sexual deviates”, and so forth. This makes others shrink from support out of fear of gaining the same label, and you avoid dealing with issues.

6. Hit and Run. In any public forum, make a brief attack of your opponent or the opponent position and then scamper off before an answer can be fielded, or simply ignore any answer. This works extremely well in Internet and letters-to-the-editor environments where a steady stream of new identities can be called upon without having to explain criticism reasoning — simply make an accusation or other attack, never discussing issues, and never answering any subsequent response, for that would dignify the opponent’s viewpoint.

7. Question motives. Twist or amplify any fact which could so taken to imply that the opponent operates out of a hidden personal agenda or other bias. This avoids discussing issues and forces the accuser on the defensive.

8. Invoke authority. Claim for yourself or associate yourself with authority and present your argument with enough “jargon” and “minutiae” to illustrate you are “one who knows”, and simply say it isn’t so without discussing issues or demonstrating concretely why or citing sources.

9. Play Dumb. No matter what evidence or logical argument is offered, avoid discussing issues with denial they have any credibility, make any sense, provide any proof, contain or make a point, have logic, or support a conclusion. Mix well for maximum effect.

10. Associate opponent charges with old news. A derivative of the straw man usually, in any large-scale matter of high visibility, someone will make charges early on which can be or were already easily dealt with. Where it can be foreseen, have your own side raise a straw man issue and have it dealt with early on as part of the initial contingency plans. Subsequent charges, regardless of validity or new ground uncovered, can usually them be associated with the original charge and dismissed as simply being a rehash without need to address current issues — so much the better where the opponent is or was involved with the original source.

So lemme get this straight; the Chinese get screwed by the Americans by selling them trillions of worthless US debt, the European banks get screwed by the Americans by selling them worthless MBS's CDO's and other forms of toxic debt, and now the Americans are crying wolf because they get screwed by the Europeans by paying for the bailout the EU banking sector?

Bingo. One of the primary reasons behind the bailout was to prevent European, Asian and other sectors that had bought fraudulent MBS, CDOs, etc., from claiming the matter was US criminal fraud. That is what the bailout really meant; namely, the US Fed covering for the criminal behavior of the US banking system. Indeed, that is what TBTF really means; to wit: too big to expose as being thoroughly criminal.

It does not end there. Not enough attention has been directed towards the motivation behind the false and fraudulently supported seeming properity of the last decade. The costs of the warring in Afghanistan and, most especially Iraq, were not anticipated to be nearly as high as they were. Mind you, the MIC was still going to have money poured into it like there's no tomorrow, but it wasn't supposed to require so much diversion to actual warring.

That warring bankrupted the US in the sense that had it not been for fraudulent financial dealings, the war costs would have eroded living standards and entailed actual 'sacrifices' rather than mere talk of sacrifice, while everyone maxed out on credit to their hearts content.

The European banks have to be made whole for the phoney mortgage securities foisted upon them, otherwise, all hell breaks loose.